Buying vs. Renting

Should You Buy or Rent a Home?

Is home ownership the right path for you?  Should you rent instead?  Buying and owning your own home is more complicated than just having the money for the down payment and monthly mortgage payments. Owning a home requires a tremendous commitment of funds, time, and attention. For some people, owning is not the best or only way to have a comfortable and safe living environment.

The following topics should help make your decision a little easier.
  •Advantages and disadvantages of renting a home
  •Advantages and disadvantages of buying a home
  •Are you ready for home ownership

Advantages and disadvantages of renting a home

For some, renting can be the best option. Renting can be viewed as a temporary solution while you plan your future.

The ADVANTAGES of renting are as follows:
  •You are excused from the bulk of home ownership responsibilities such as
  grounds maintenance and remodeling.
  •Your rental many include amenities such access to pool, tennis courts,
  laundry facilities, security and free parking.
  •There is no large down payment, only a security deposit.
  •Many of your monthly expenditures (rent, utilities) are fixed, making
  budgeting easy.
  •You are not taking any equity risk on the property should there be a
  downturn in the market
  •If you do not like where you live, moving is relatively simple.

The DISADVATAGES of renting are as follows:
  •No special tax deductions.
  •There are no equity gains in the rising value of property.
  •Space and storage is usually less than a home.
  •Changes to accommodate your life or growing family cannot be made or
  are limited in scope.
  •Rents can rise with inflation and or supply and demand in the rental   
  market.
  •You will probably have restrictions on noise level, pet ownership, or
  children.

Advantages and disadvantages of buying a home

The ADVANTAGES of buying a home:
  •The home may increase in value, resulting in a significant gain in net
  worth.
  •Homeowner's tend to have better credit ratings.
  •The longer you live in a home, the more equity you build that can be
  leveraged using an emergency loan.
  •If you have a fixed loan, your payment will remain relatively constant for
  the life of the loan.
  •The interest paid on your loan and taxes are legitimate income tax
  deductions.
  •Ownership may contribute to security, especially in retirement years
  when income normally decreases.
  •A homeowner can borrow against his/her equity, as the value of the
  home increases.
  •As a homeowner you have the freedom to make improvements and
  changes to the home and surroundings as desired (although a development  
  or association may have restrictions and prohibitions).
  •Home ownership can contribute to the general well-being and sense of
  "roots" of the family, especially for children.
  •Homeowners generally are concerned about community affairs and how
  they may affect their property.

The DISADVANTAGES of owning a home
  •A substantial down payment is needed.
  •Owning a home requires a substantial commitment in time, emotions,
  and money.
  •Homes may decrease in value if the neighborhood deteriorates changes
  quickly, or the real estate market suffers a decline.
  •Due to the initial expense of buying a home, financial resources may be
  limited or reduced for other purchases or activities.
  •Maintenance and repairs are inevitable and could be costly.
  •Part of home ownership includes procuring enough income to afford
  insurance of all kinds including loss of the house as a result of a natural
  disaster.
  •The cost of buying a home should also include the cost of moving into it
  and furnishing it.
  •Security is an issue if you are not home often due to travel.
  •Unexpected loss of income due to job termination or unemployment may
  limit money available for home ownership costs.

Are You Ready for Home Ownership?

The Neighborhood
 
Life can be greater than you thought or it can be a nightmare if you do not consider the neighborhood as part of your decision. Here's a list of things to check and consider.
  •Local history
  •Local government
  •Its proximity to factories, trains, airports, traffic, highways, farms, etc
  •Appearance
  •Schools
  •Whether the neighborhood is appreciating or depreciating in value.
  •Safety and security.

Accessibility

Little things like driving through traffic bottlenecks or through industrial zones to get to shopping, schools or work can be a real issue over time. Consider the convenience of your desired neighborhood in relationship to:
  •Work
  •Shopping areas
  •Schools
  •Entertainment and lifestyle activities
  •Places of worship
  •Condition of the roads
  •Available public transportation.

Community Facilities

Unless you are on the Internet 24 hours a day seven days a week, you will want to use the local resources to enhance your life. Consider looking into the following:
  •Police and fire stations
  •Health facilities
  •Sanitation services
  •After school activities
  •Recreational facilities such as parks, golf courses, hiking trails, etc.

The apartment or home itself
  •Space, arrangement, and condition.
  •Bedrooms and bathrooms.
  •Kitchen and work area.
  •Dining and living areas.
  •Heating and lighting.
  •Room sizes, shapes, and wall areas to permit use of furnishings and
  equipment.
  •Interior and exterior finishes (acceptable types, condition, and ease of
  maintenance).
  •Outdoor space (patio, deck, lawn, garden space, outdoor storage).